The collapse of the Russian ruble in 2019, scenarios, and forecasts

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Since the beginning of 2018, the ruble has lost more than 13% against the Euro and 19% against the dollar. At the end of December the USD / RUB pair was trading in the area of 68.5 RUB, and the pair EURRUB above 78 RUB a Significant weakening of the ruble against the dollar and the Euro observed in the moments of introduction of new anti-Russian sanctions. Support for the Russian currency during the year had expensive oil, however, by the end of 2018, the barrel started dynamic decline. At the time of writing, Brent is trading around $52. Since the beginning of October the price of a barrel fell by 38.5% at $84.6 to $52.
In 2019, the ruble will experience a new wave of pressure, triggers which with high probability will become the next economic-political events:
– since January 15, Bank of Russia will conduct foreign exchange interventions for the purposes of the Ministry of Finance;
– increases the probability of introducing new anti-Russian sanctions “case Skrypalia”, which can get banking sector and the Russian government debt;
– the tense situation in Ukraine may have a negative impact on exports of Russian gas to Europe;
– a further fall in oil prices will stimulate the weakening of the ruble against the dollar and the Euro. The participants in the commodity market reacted with disbelief to the decision of OPEC to reduce oil production in 2019. Stimulate downward movement of prices for oil, the projected slowdown in global growth and reduced demand for raw materials;
in 2019 to 20% increase VAT;
inflation until the end of 2019 is expected to reach 5.5%(yoy), up from 4% in 2018.
According to our expectations, in the first half of 2019, the dollar-ruble will be traded in the range of 70-75 rubles per dollar, Euro-the ruble – in the range of marks 80-85 rubles per Euro against the background of negative factors listed above. In the second half of 2019 possible strengthening of the ruble against the dollar and the Euro and return to middle elevations 2018 in the case of stabilization of oil prices in the range of $60-65, and the decrease in geopolitical tension.
Prerequisites for the mitigation of the sanctions rhetoric, the United States will be the conclusion from under the restrictions of the company “RUSAL” Oleg Deripaska. It is possible that this practice spread to other Russian companies under sanctions. In the second half of the year, in our opinion, trading in the USDRUB pair will be in the range of 65 to 70 rubles per dollar, a pair EURRUB – 75- $ 80. for one Euro.
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Veronica Dnieper,
Leading specialist of information-analytical center,
Alpari